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U.S. government debt yields were sharply higher Friday morning, as investors eagerly anticipated comments from Federal Reserve Chairman Jerome Powell.
U.S. Markets Overview: Treasurys chart
At around 04:00 a.m. ET, the yield on the benchmark 10-year Treasury note, which moves inversely to price, was higher at around 1.6540%, while the yield on the 30-year Treasury bond was also higher at around 2.1506%.
Market participants will closely monitor Powell’s speech at the Jackson Hole symposium later in the session, hoping for clarity on monetary policy. It comes after minutes from the U.S. central bank’s July meeting tempered hopes of aggressive rate cuts over the coming months.
The Fed’s top official is scheduled to address an audience of policymakers and economists at around 10:00 a.m. ET.
As of Friday morning, Fed funds futures were pricing a likelihood of almost 90% for a 25 basis point rate cut at the September meeting, and between one or two further quarter-point rate cuts between then and the end of the year.
Meanwhile, the widely watched 2-year/10-year U.S. yield curve — often monitored as precursor for recession — briefly moved back into inversion on Thursday. It was the third time in two weeks that the bond market yield had flashed recession red lights.
The 10-year Treasury bond has since pulled away from the 2-year yield, hitting a one week high of 1.66% Friday morning.
On the data front, new home sales for July will be released at around 10:00 a.m. ET.
There are no major Treasury bond auctions scheduled on Friday.